Texas Real Estate Exam (State)

Texas Real Estate Commission (TREC)

-created in 1949

-purpose: to administer the provisions of the License Act

-authority to make rules and regulations

-9 members (3 represent the general public, 6 are real estate brokers)

-all appointed by the governor and approved by the Senate

-serve 6 year terms

-has the power to subpoena books, records, and witnesses

-has the power to issue or revoke Real Estate Licenses

Broker Lawyer Committee

-writes promulgated contract forms

-13 members (6 are brokers appointed by TREC, 6 are lawyers appointed by the President of the State Bar Association, 1 is a public member appointed by the governor)

Real Estate Recovery Fund

created by TREC to pay aggrieved persons who suffered a monetary loss due to unscrupulous acts of the licensees

-persons can receive up to 3 times the amount of money lost

-when an amount is paid out of it, the license of the individual is automatically revoked or suspended without a hearing (cannot be recovered until the fund has been repaid with interest)

persons who must have a real estate license

1.attorneys who participate in a commission split

2.auctioneers involved in a real estate transaction

3.apartment locators

4.real estate salespeople

5.the designated officer of a licensed real estate corporation or the designated manager of a licensed Real Estate Limited Liability Company (the designated one is a broker)

1-4 MUST BE SPONSORED BY A BROKER AND RECEIVE COMMISSIONS ONLY FROM THAT BROKER

steps in obtaining a real estate license

1. meet the educational requirements

2. submit an application with or without a sponsoring broker

3. submit the required fees

4. pass the state exam

5. demonstrate integrity

licensing requirements

-18 years of age

-resident of Texas at the time of application

-comply with legal residency requirements (not an illegal alien)

educational requirements

180 classroom hours with a minimum of 120 in core real estate courses

-60 hours in Principles of Real Estate, 30 hours in Law of Contracts, 30 hours in the Law of Agency are mandatory

TREC Consumer information form 1-1

-notifies the public of the recovery fund

-applies to both real estate licensees and inspectors

-must be displayed in the broker's office

-must be included in listing and buyer representation agreements, as well as any invoices for services

Texas Real Estate License Act (TRELA)

-passed by legislation to protect the public against unscrupulous brokers and salesmen

-rules and regulations are construed liberally with a view toward their purpose, and have the full force and effect of the law

foreign broker

a broker from another state

-must work through resident brokers

-may collect commission from a Texas broker, as long as that broker does not negotiate in Texas

advertising rules

-broker name must be on each page of the web site

-licensee's web site must include the name of sponsoring broker

-when advertising listed property, broker or company name must be in the ad

Senate Bill 489

allows the broker to act as an intermediary in a transaction where he represents both the seller and the buyer and has the written permission of both parties including how the broker will be paid

-only a broker can act as an intermediary

-appropriate for the broker to appoint associates to work with the parties in the transaction (may give advice and opinions to one party)

-requires a licensee to give Information About Brokerage Services (IABS) to a prospect at the first substantive dialogue

substantive dialogue

a face-to-face meeting where substantive dialogue of real estate takes place or any mailing with a substantial amount of information about a particular property

subagent

a licensee who represents the seller while being sponsored by a broker other than the listing broker

-working with a buyer customer rather than a buyer client

Seller's Disclosure of Property Condition

must be given to a buyer before he signs an offer to make that offer binding on the buyer

-if the buyer does not have the disclosure before signing, he has 7 days to terminate his offer, after receiving the disclosure

-disclosure required in most states, but not all (required in Texas)

new listing

a licensee has 5 days to enter a new listing into the MLS

contracts

-must use standard contract forms when available

-TREC has promulgated sales contract forms for most residential properties (no forms for commercial transactions)

-MUST use a TREC promulgated form unless another contract form has been prepared and is REQUIRED by the owner of the property

-Broker Lawyer Committee writes forms, TREC promulgates them

Seller's Temporary Lease Addendum TREC 15-3 and Buyer's Temporary Lease Addendum TREC 16-3

used when the lease period is 90 days or less

backup offers

-all must be presented to the seller, order does not matter

-to become effective the previous contract must be terminated and the backup buyer must pay any option fee, name any option period, and deposit any earnest money with an escrow agent

-option fee must be paid independently of any other consideration

party accepting the final change

the last party to sign a contract

-broker is responsible for filling in the effective date

- individual has four years from the effective date of a contract to file a complaint with TREC regarding the licensee involved (must be written and signed)

contingency clause

a clause in a contract requiring a condition to be met

earnest money deposit

if a broker accepts an earnest money deposit, and acts as an escrow agent, the money must be deposited in a trust account by the close of business of the 2nd business day after the execution of the contract

-broker must keep records of this account for 4 years

Statute of Frauds

requires that all contracts that relate to the transfer of any interest in real estate must be in writing to be enforceable

-also applies to compensation agreements, such as listings and buyer representation agreements

RE inspectors

must use promulgated forms for residential inspections

mediation

a mediator hears both sides of a dispute and tries to help the parties come to an agreement

arbitration

an arbitrator hears both sides of a dispute and tells the parties what to do

community property

-a statutory estate in Texas

-all property acquired during marriage, including property acquired with labor, is jointly owned by the husband and wife

-income on separate property is community property

-increase in value on separate property is not community property

homestead

parcels of real estate owned and occupied by families (one per person or family)

-a statutory estate in Texas

-protected from forced sale by all creditors except: mortgage, property taxes, mechanics and materialmen's liens, and homeowner associations

-designated to protect the interests of homeowners

-if foreclosed on for unpaid property taxes, the owner has 2 years to redeem the property (6 months for unpaid HOA fees)

-max size: urban 10 acres, rural 200 acres

-derive from the Texas Constitution

Texas Deceptive Trade Practices-Consumer Protection Act (DTPA)

allows an aggrieved consumer to hold a seller of goods and services liable for damages

resulting from deceptive or unfair trade practices

-allows for the recovery of triple damages

-does not apply to commercial properties over $500,000

-individual has 2 years from the discovery of the deception to file a complaint

intestate succession

the laws that govern how property passes when a person dies without a will or with a will that makes only a partial distribution of his/her property

-courts will appoint an administrator to settle the estate

-property will be distributed according to the Laws of Descent and Distribution

-heirs will have Title by Descent

penalties for practicing an act of brokerage without a license

-guilty of a Class A Misdemeanor

-subject to a fine of not more than $4000 and/or imprisonment in county jail for up to one year

-persons guilty of a violation of the License Act and whoever profited there from are liable for additional civil penalties of up to three times the amount of money received

salesperson's sponsoring broker

responsible to the TREC, the public, and the clients for the acts of a salesperson